Insuring Your New Home

Home buyer alert! Don’t leave homeowner’s insurance to the last minute when you purchase a new home. Your mortgage lender requires it to protect what could be the biggest investment in your portfolio.

An Axess Law licensed real estate lawyer (Toronto area or Ottawa) can advise you on getting a fire insurance binder. 

We help you close the deal so you can move into your new home as quickly as possible.

Just Another Day

When you buy home insurance, you’re protecting financial assets from unpredictable and worst-case scenarios. Severe wind, tornado warnings or electrical fires can all wreak havoc on well-laid plans for a comfortable lifestyle. What should have been just another day could turn out to be a costly misadventure.

File an insurance claim after a natural disaster.

Why Buy Insurance

Protecting your assets is cheap compared to rebuilding or repairing your home. Consider how much it would cost to:

  • repair a fence damaged by construction next door
  • replace electrical wiring ruined by a faulty heater
  • redo siding after a vehicle collision
  • fix shingles struck by falling objects from an aircraft (it happens)
  • or install new wallboard after a kitchen fire.

Insurance coverage puts your mind at ease and assures your lender the fair market value of your home won’t decline if the unexpected happens. The average Ontario home owner pays around $104 a month or $1,250 a year for insurance. It’s small change for a major investment.

Who Needs Homeowner’s Insurance?

You need homeowner’s insurance.

Prove You’re Insured

It may not be mandatory under real estate law in Ontario, but unless you buy your home or land outright, potential lenders can demand proof of insurance. Failing to attend to this one detail between signing an agreement of purchase and sale and closing day could delay or frustrate your purchase.

Protect Vacant Land

Not only that, but vacant land you buy, with or without outbuildings, can create unknown liabilities. Vacant land insurance protects you if visitors, contractors or trespassers pursue you for damages from injuries they suffer on your property. All it takes is an abandoned well you didn’t know about it or rusty, barbed wire fence to make you liable.

Get a Fire Insurance Letter

Prevent problems before they happen by asking your insurer to send a fire insurance binder to Axess Law before your closing date. We take care of discharging a mortgage in Ontario if you already have one — and finalize new mortgage arrangements with your lender. We meet your closing date on time and for less than you would normally pay.

What to Insure

Mortgage lenders generally insist on standard insurance coverage for named perils like fire, lightning strikes, wind or water damage or explosions. Your fire insurance binder is a letter confirming insurance is in place before a real estate transaction completes.

Conditions Affecting Insurance

Your home’s age and condition affects insurance rates, so shop carefully. Getting a home inspection is advisable because flammable insulation, aluminum wiring or a wood-burning fireplace all increase fire risk. While you may not be turned down, it could take longer to find fire insurance.

Exclusions to Watch For

Read the fine print. Overland flooding coverage can be excluded in a floodplain and many policies leave out sewer backup or hail damage. Insurance riders give you that extra coverage for flood and water hazards.

Are Insurance Riders Worth It?

Compared to comprehensive coverage for your home and contents or broad coverage that includes more frills, basic coverage does produce savings. But do you really want to leave out riders for expensive, hard-to-replace items like antique jewelery, cameras, glassware or a rare stamp collection that are irreplaceable to you?

Our advice: get only the coverage you need, but don’t overlook the basics.

Covering Personal Liabilities

Personal injury and civil lawsuits can take you by surprise. Relax! Home insurance may have you covered.

Your home can be protected from financial liens that affect your ability to sell or refinance if a courier, landscaper or neighbour gets hurt anywhere on your premises. You could be far away, on vacation or at work, and still be covered for legal or medical expenses.

Legal liabilities from civil lawsuits can also be captured under homeowners’ policies. Tell your insurer if you work from home or have business interests that could expose you to financial claims.

Questions to ask real estate lawyers.

Getting Condo Insurance

Condo owners beware.

Not only is condo insurance for damage or loss to belongings and your storage locker a wise investment, your liabilities if fire or a water leak damages adjoining units demand attention. It never hurts to have personal liability coverage, just in case a visitor slips on the tile floor.

Is condo living for you? Find out what it takes to live in a condo.

Common element fees can take a hit if the condominium corporation is negligent in maintaining icy sidewalks in winter. The condo building’s master insurance policy should cover that, but check before you buy.

You could be compensated for living expenses if you have to stay elsewhere temporarily because of damages to your building or unit. Ask your insurer to explain your coverages and exclusions.

Reducing Insurance Costs

Increasing deductibles, given the likelihood you’ll rarely file a claim, or installing security cameras and sprinklers can keep insurance costs in line. Look for discounts when you turn 55 or stop smoking and take advantage of deals for members of associations or college alumni. It could be worth your while.

Can You Make Conditional Offers?

Most offers to purchase are conditional and you can back out, although how your agreement is written could affect if you keep your deposit. You may be sued for damages if the home seller:

  • accepts a lower offer after yours is withdrawn
  • wrote an offer to buy a home and loses money
  • or incurred costs like storing furniture, thinking the deal was done.

If you worry getting insurance could be an issue, make your agreement of purchase and sale contingent on the home inspection not affecting insurance availability. It might give you wiggle room when you need it.

Mortgage Lawyers for Real Estate Closings

An Axess Law real estate lawyer in Ontario can close your home purchase online or in person. Meet with our lawyers remotely using secure video conferencing software, anywhere in Ontario, from the comfort of your home or office. 
Use our easy online booking form to make appointments 7 days a week, day or evening. Or dial toll free to 1-877-522-9377 —  647-479-0118 in Greater Toronto Area —  to book a meeting in person at Axess Law locations.

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